Anglo-Australian mining titan Rio Tinto reported financial results for the first half of 2016 yesterday. The firm credits strong performances in bauxite and aluminium as contributing to their strong performance in the half.
“Rio Tinto has generated net cash from operating activities of $3.2 billion and reported underlying earnings of $1.6 billion, against a backdrop of continued volatility and lower commodity prices,” explained Rio Tinto chief executive Jean-Sébastien Jacques. “We focus on delivering value to shareholders. This focus is unrelenting, with further cost reductions achieved in the half and EBITDA margins of 33 per cent. With our strong operating cash flows, tight control over capital expenditure and progress on divestments, the balance sheet remains robust. Having paid the 2015 final dividend of $1.9 billion in April 2016, we reduced net debt during the half to $12.9 billion.”
“Our balance sheet strength and Tier 1 assets provide a stable foundation in these uncertain and volatile markets, which is fundamental in a cyclical and capital-intensive industry,” he continued. “We will generate cash at every opportunity, which we will then allocate in a disciplined way to deliver returns to shareholders, while also investing in compelling growth.”
Rio’s aluminium division turned in higher production numbers overall, but lower prices meant that the higher output still did not put earnings into the black (note: numbers do not include impact of curtailment of the Gove alumina refinery). On the whole, production was at exceptionally high levels, as several of Rio’s sites achieved production records – namely Yarwun, Gove, CBG, and Kitimat. For the first half of the year, the firm turned out 23,160 thousand metric tons of bauxite ore, up 9% year-on-year from 21,179 thousand metric tons in 2015. Rio produced 4,065 thousand metric tons of alumina in the half, up 6% year-on-year from 3,821 thousand metric tons. The firm churned out 1,797 thousand metric tons of aluminium in the just-ended half, up 10% year-on-year from 1,627 thousand metric tons last year.
The aluminium group’s gross sales revenue for the half was US$4,553 million, down year-on-year by 17% from last year’s first half total of US$5,455 million. Underlying EBITDA in the half was US$1,076 million, down 36% from last year’s US$1,688 million. Underlying earnings for the group this last half was US$377 million, down 52% year-on-year from last year’s first-half total of US$793 million. Net cash generated from the group’s operating activities was US$993 million, off 36% from 2015’s first-half total of US$1,556 million. The group’s capital expenditures excluding EAUs in the first half of this year was US$328 million, down 64% from last year’s first half, when it was US$912 million.
The firm expects that it will end the year producing 45 million metric tons of bauxite, 7.8 million tons of alumina, and 3.6 million metric tons of aluminium.